23% of Small Business Owners Say Inflation Is Their Company's Greatest Problem. When Will It Get Better?

Inflation has been a problem for consumers for several years now. But it's not just individuals who are struggling with higher costs. Inflation has had a big impact on small businesses, too.

A good 23% of small business owners say that inflation is the most important problem in operating their business, according to September's NFIB Small Business Optimism Index. If higher costs are hurting your business, you may want to make some changes ASAP.

When will inflation subside?

The Consumer Price Index, which measures changes in the cost of consumer goods and services, peaked at 9.1% in June 2022. In September, the index came in at 3.7% for annual inflation, which is a vast improvement. But on a month-to-month basis, the index was up 0.4% from August. So all told, inflation is still a problem, albeit perhaps a smaller one than it was a year or so ago.

If you own a business, you may be wondering when inflation will subside. And the answer is, never.

Inflation is a generally persistent factor in our economy. Over time, a 2% rate of annual inflation is more of the norm, and it's what the Federal Reserve tends to target. But all told, operating costs for businesses have a natural tendency to rise over time, just as living costs tend to rise, albeit modestly in an ideal world, for consumers.

Today's inflation measurements could persist well into 2024 -- it's hard to know. The Federal Reserve may raise interest rates one more time late this year to try to bring inflation down. But that's not guaranteed to happen.

Also, if the Fed raises rates, that's not necessarily great for you as a small business owner, either. It could mean higher borrowing costs if you need a loan and higher interest rates on your credit cards.

How to battle inflation

You can't make inflation go away. But one thing you can do is conduct a thorough analysis of your costs and try to find ways to reduce your company's spending.

One option you may want to consider is reducing office space if your business lends easily to remote work. If you have employees who are happy to do their jobs from home, let it happen if it saves you money by virtue of getting to rent much less space.

Additionally, comb through your bank account and credit card statements and see if you're paying for any services you're not really using or getting great value out of. You may be paying for advertising or marketing services, for example, that aren't really driving more customers to your door. If that's the case, it may be worth canceling.

Finally, pay attention to the benefits you're spending money on. If you're bringing in a financial wellness coach once a quarter but employee participation is low, then you may want to prioritize your spending elsewhere.

Unfortunately, inflation could end up being a nagging problem for small businesses well into 2024 and beyond. But if you do a good job of monitoring your company's expenses and being careful with your spending, you can ideally make it less of a problem for you.